Main navigation

Spend

An Experian study says the Lexus RX 350 is the most-purchased luxury vehicle.

Credit agency Experian released data this week about luxury car buying, and I’m a bit surprised by one statistic: only 16% of luxury car buyers pay cash.

It turns out that the majority of luxury vehicle buyers lease their vehicles. 54% lease and 30% get a loan.

While general financial wisdom is that you should buy rather than lease a vehicle, there are plenty of circumstances where this isn’t true. Even taking out a loan can make sense depending on the rate and your alternative use for the cash. Still, the fact that 84% of luxury car buyers lease them or get a loan suggests that many car buyers should probably look at a less expensive car.

One of the 5 ways to get more enjoyment out of spending is to buy things that save you time. Another way to get enjoyment from spending is to give things to others. Combine the two and you should get double the happiness!

Here’s a way to do that: Gift someone a Roomba.

The only regret I have about buying a robot to vacuum my floors is that I didn’t do it sooner.

Now, when my dog is shedding becomes visible, I just push a button on the Roomba and it goes to work. It vacuums the floor and then returns to its docking station to charge, all without intervention (usually). It’s much easier than pushing around a vacuum.

In some ways it’s superior to a regular vacuum. It cleans hard-to-reach areas like under a sofa. It also picks up a lot of dirt that regular vacuums leave behind.

It amazes me when I run it in the bedroom after the floors have just been vacuumed. It still manages to fill up with dog hair and dirt.

The only complaint I have is that it tends to get stuck underneath the lip of cabinets. The Roomba is just the right height to get wedged underneath.

A robot vacuum won’t replace your regular vacuum, but it’s a great tool to clean the floors between visits by the maids.

What to buy and where to buy it

There are two well-known brands of robot vacuums: Roomba and Neato.

Roomba is the most popular, but Neato is a more efficient cleaner. The Roomba takes a seemingly random path around your floor. It can be annoying to have it travel to a corner and pick up some of the dirt, only to skip nearby dog hair and travel to the opposite side of the house. Sometimes it takes 15 minutes for it to return to the spot it missed.

I did the homework before last Christmas and went with Roomba, but the Neato might be just fine for you.

I recommend getting at least an 800 series Roomba. Maintenance on earlier Roombas was quite extensive. Since the whole point of a robot vacuum is to save you time, why buy one that requires constant upkeep?

Other than emptying the waste bin, the 800+ series robots require about 5 minutes of maintenance every 10-15 times you run them.

Pro tip: Save 20% on a Roomba using a 20% coupon from Bed Bath & Beyond. The coupon states that it doesn’t work on 800+ series Roombas, but that’s not encoded on the coupon.

This Tesla P85 originally cost over $100,000. It’s available used for $59,000.

Take a test drive of a Tesla and you’ll think it wise to short the oil companies. It’s an incredible driving experience that doesn’t require a drop of gas.

The downside is that the car of the future is expensive. It’s easy to top $100,000 for a Tesla after adding features.

The good news is that used Teslas are starting to come on the market, often at discounts of 30% or more off the original price.

This is a first-hand guide to buying a used Tesla.

Do you really need a used one?

Before we drive into a tutorial on used Teslas, ask yourself this: Can you afford a new one instead?

Believe it or not, you can get a brand new Tesla for just $62,500 after the $7,500 government rebate.

That’s for the basic 70 kWh battery with no options. Even without options, this might be a better choice for some people than buying an older, used Tesla. The new cars come with upgraded hardware and small fixes that are superior to Teslas that are even a year or two old.

A basic Tesla is still likely better than any car you’ve driven, but Tesla sells basically everything as a feature. The $70,000 entry model car doesn’t even come with leather seats! [Read more…] about How to Buy a Used Tesla

It’s natural to think that the more money you make, the more you can spend, and thus the happier you will be. But as you make more and spend more, you quickly discover a disconnect in this logic.

Happy Money is a recently-updated book (Elizabeth Dunn, Michael Norton) about the science of spending and how to make yourself happier when you spend. The principles are simple, yet we often overlook them. I’ll refer back to these principles frequently on this site, so here they are:

1. Buy Experiences. The best way to look at this is to consider the opposite first. Odds are, when you bought your current car, you were pretty stoked about it. You drove it just to drive it, to experience it. After a couple years you got less satisfaction out of it and looked at it as more of a mode of transportation.

Compare that to some experiences you’ve had, whether they were vacations or evenings out with friends. Do you have a memory or two that you remember often?

This is why you should buy experiences. Experiences give you joy well after you’ve bought them (if they even cost money). Physical goods eventually don’t give you happiness. You end up upgrading, enjoying it for a period of time again, and then continuing the cycle.

I hadn’t really thought about this before reading Happy Money. I used to think spending money on experiences was throwing away money since you had nothing to show for it when you were done, as opposed to buying a physical item.

2. Make it a Treat. Simply: if you get something too often, you take it for granted.

Remember the first time you flew first class and thought it was awesome? After your tenth time, you probably appreciated it less. You start nitpicking the first class experience and the food.

Perhaps a couple flights in economy will make you appreciate first class again.

3. Buy Time. Spend money on things that save you time, so that you can do things you enjoy with your time. One great and reasonably-priced timesaver: a Roomba vacuum.

4. Pay now, consume later. Since this site is geared to people with savings, I’m going to assume you aren’t sitting on a mountain of credit card debt. But the principle of paying now and consuming later is still relevant.

The key is to separate the payment process from the use of any major purchase, be it a vacation or a car. Buy your flights a couple months in advance. Consider paying in advance for a vacation rental. When it comes to to enjoy it, you won’t have to think about the cost.

Growing up, I was told to delay the payment process as long as possible to earn interest on the float. That’s not very relevant when bank accounts are paying less than 1% interest!

5. Invest in Others. In other words, help someone out. Donate time or money.

It is amazing how good it feels to help someone out. I’d argue that spending time helping someone feels much better than writing a check, which is a topic for another day.

The Tesla Model S is a sweet — but expensive — car. Which is why the above lease offer that greets you when you visit Tesla’s website seems like a great deal.

I’ve never leased a car, but $575 a month to drive a Tesla seems like a great deal. Almost too good to be true. In fact, it is too good to be true.

After test driving a Tesla, I started to dig into the numbers. As it turns out, your total cost is going to be at least $970 a month before tax.

Tesla does a couple things to get to the $575 number.

Unlikely Fuel Savings

First, it deducts $167 for monthly gas savings. Your payment is actually $742, but Tesla says you’ll make up the difference by paying for cheaper electricity.

This $167 number is awfully generous.

First, it assumes your old car got just 20 mpg and required premium gasoline. (I’ll admit that my old car gets less than 20 mgp and requires premium gas.)

Second, it assumes you’re paying $3.90 per gallon for this gas. That might have been accurate at some point, but right now it’s significantly less.

Third, it assumes you pay $.12 per KwH for electricity to charge your Tesla and use the company’s Superchargers for 10% of your charging.

Maybe I’m unfortunate, but in my hometown of Austin, $.12 per KwH isn’t close (at least during the summer). Some electricity providers are starting to offer off-peak charging, which could make this number reasonable if you charge your car overnight.

I personally don’t spend $167 on gas in an entire month, so I can’t save that much. But long distance commuters might find greater savings.

Bottom line: you’ll likely get gas savings, but the amount stated is an edge case at today’s gas prices.

Down Payment and Fees

The other bit of trickery Tesla is using is assuming a $5,000 down payment. This is like the car salesman asking “What do you want your payment to be?” because they can make it really low by playing with the variables.

According to Tesla’s website, you’ll also pay $3,195 in other charges due when you get the car.

Add it up and your 36-month lease costs a total of $34,907, which is $970 per month. This assumes you get the lowest priced model (sans even leather seats) and drive only 10,000 miles a year.

With leasing, there’s also a big sales tax factor. I live in Texas, and here you have to pay sales tax on the full value of the car up front, so I’d have to chip in another $4,375.

Suddenly $575 a month has become more than $1,000 in total cost, even if you live in a low sales tax state. You’ll save some money on gas, but most people should just calculate that as a small bonus.

The Model S is an amazing car. If you can afford the $70,000 starting price tag, I’d definitely recommend test driving one. Just don’t think you’ll be able to drive away with one for $575 a month.